Breaking News SHAKES The AI Sector - Micron, AMD, Nvidia, CRWV, & More

Well, AI investors, it has been a rough week in the AI sector to say the absolute least as we have essentially every major portion within the world of AI getting absolutely smashed outside of software. I mean, we have semiconductors getting torn down, computer hardware, communication equipment, Neo clouds, all just getting absolutely battered in terms of price action. I mean, look at this. We have Nvidia, biggest company in the world, down 6% this week. Micron, AMD, Intel, all down 12 to 13%. We got things like Dell and AMAT down 17 8 18%. We have Lumentum Holdings down nearly 20%. It has been a bloodbath for AI, and this has led a lot of people to ask some very important questions. Why is it happening? Why are we seeing AI performing so poorly, especially when, you know, the rest of the market isn't looking that bad. Don't get me wrong, the stock market's not been great this week, and you know, the S&P 500 is in the red overall, but if you look at the rest of the sectors on the weekly performance, it's not been that bad, you know. Many of the Mag 7 are in the green. We have some different sectors in the green like healthcare, credit services, consumer defensive energy, right? There are There is some green going on in the market. I mean, just look at the the equal weighted S&P 500. It's not that bad of a week all in all. And so, why is it that the AI sector is seemingly being targeted for all of these losses? Is this the AI bubble popping, or is this a great buying opportunity, just a momentary dip, you know? A lot of these questions, and there's a lot of uncertainty out there as a result of it. And so, because of that, in today's video, essentially what I want to do is just break down everything for you. We're first and foremost going to talk about why it is that we are seeing such a red week and red performance across the AI market as I believe it comes down to five core reasons. Then we're going to take a look at the charts and talk about what's happening from a technical perspective because there are some interesting things and interesting opportunities appearing right now, especially for companies like Micron and AMD that we'll talk about. And then we'll finish up by talking about what I'm doing and my own trades and in my own portfolio as a result of everything that's happening in the AI sector right now, okay? So, as you all can probably tell, we We a lot to get into today, and I don't want to keep you too long, folks. So, let's go ahead and let's begin. So, first and foremost, let's talk about the five reasons as to why we are seeing the AI sector performing so poorly over the last few days. The first one, of course, being that Gartner report that we saw yesterday. So, if you don't know who Gartner is, this is a big advisory company. They produce these great reports, essentially doing research on different aspects of the world, right? And essentially what they did is we got a report from them on the 14th, which was yesterday, by an analyst named Will Summer. And the headline was that over 80% of Neo clouds cease independent operations by 2030. So, we're talking companies like Nebius, we're talking companies like Coreweave. And these are essentially more Um what's the way that you So, think about what a data center is, right? And you have your hyperscalers who create your data centers, your Amazons, your Googles, your Metas, your Microsoft, etc., right? Well, you have these more isolated data centers that are created specifically for AI by these companies called Neo clouds. Again, you're thinking Nebius and Coreweave. And this whole data center is built specifically for the purpose of AI. It's not like Amazon's ones or Google's ones, of course, which can feature other things outside of AI, right? These ones are specifically built, they're specialized for AI, okay? And essentially what this report says is that over 80% of Neo clouds will cease independent operations by 2030. And the scary stat is the gap data centers would need 8.5 trillion dollars in revenue to justify the spend that they've been putting into build these data centers. And Gartner only sees about 3.6 trillion dollars worth of revenue coming in over that timeframe. So, essentially what they will need to justify all of the spending and what they're planning on getting right now, according to Gartner, there is a gap that is not even close. I mean, that's more than double. They'll need more than double what Gartner sees them getting. And that can be obviously extremely, extremely problematic if it is true. Because what it means is that some of the infrastructure spending that's going into these data centers right now, um could could essentially like blow up, you [laughter] know? Not like the actual data center, right? We're not going to see them just blow up, but essentially I mean like it's just money's getting poured down the drain in the form of trillions. And that could be quite problematic because it's not like these Neo Clouds like Nebius and CoreWeave are just like on their own. They're they're not involved. No, some of these are being funded by major companies like an Nvidia, for example. So, that's obviously not a great report. And essentially, the second that we saw this report come out, you can see what happened. If we go look at what happened with say Nebius' price, for example, Nebius just absolutely capitulated almost immediately. Just immediately tanked. Same with CoreWeave. Look at that. I mean, CoreWeave put in a loss on the day of like 17% yesterday. Absolutely disgusting. And it's still continuing today with a further 6% pullback. So, the market is taking this very, very, very seriously, okay? Now, one thing that I do want to say is that there are some caveats to this. I think the market's definitely reacting to the headline, but maybe not looking at some of the fine print. And you guys know that we like to look for the nuances and the caveats here and on this channel. And one of the biggest things, one of the biggest nuances that I think the headlines didn't pay attention to, is what they were saying with, you know, the way they framed it. So, as we can see here, Gartner's own framing is consolidation, okay? So, cease independent operations. You see it right here. Um 80% of Neo Clouds cease independent operations. Um most mostly means getting bought or merged, not 80% going bankrupt. So, there's a very big difference between going bankrupt and ceasing independent operations. So, there's a world in which, you know, these Neo Clouds may end up getting going through a merger or getting bought out and becoming absorbed by a much bigger entity that can absorb maybe those costs or those losses if it is going to end up being some sort of loss, right? So, I think they were very specific with the way that they framed it. I think they were very specific with the way that they framed it because if they meant bankrupt, they would have said bankrupt. Gone out of gone out of operations. That's what they would have said, but that's not what they said. They're basically saying they can't continue to do this on their own. And so, there's a world in which they get bought out or merged at some given point into the future, which I think is a much different future than saying 80% of neo clouds are going to go bankrupt in the next 3 years. There's a huge difference between those two, but the market responded like that's what they said. Now, in addition to that, the impairment number is a conditional if they keep spending at this pace. So, essentially, the $8.5 trillion that they will need in revenue to justify all of the spending on these data centers, that's conditional on if they keep spending at the pace that they are, which is not a short term. They could slow down on their spend. So, that's also another conditional that I think the market is not factoring in. I think the market's thinking based on what they spent so far, they will need 8.5 trillion. When in real reality, they may be only going to generate 3.6 trillion. But the truth of it is that they would only need 8.5 trillion if they keep spending at this pace, which they don't have to keep spending at this pace if they see their trajectory going down this route. You get what I'm saying? And then the final caveat, the final nuance to this is that the big hyperscalers, which were also slightly impacted by this at the time, they're way better positioned than the neo clouds are, especially in terms of general financing, right? So, there's a bunch of nuances to this report that make me go, "I wouldn't have responded to this like the market did." Like I think the market maybe overcorrected to this a little bit, but you do see that all the time, right? These major companies, advisory companies, reporting companies, research companies, they'll release these big reports and the market will freak out, then the market will redefine print, then the narrative will start to change, and you'll kind of see a bit of recovery. So, I do believe that there is definitely a lot of validity to the concerns that Gartner has, but I do think the framing was very specific and a way to get a bit of a reaction like they got, in my opinion. But obviously, I mean, only time will tell, and I'm no expert with neo clouds, so feel free to correct me down in the comments down below if you disagree. Okay? Now, the second reason, the second thing that we saw that has kind of contributed to all of this chaos came from Barclays strategist Venu Krishna, okay? So, essentially, what Venu flagged was that hyperscalers, data centers, and neo clouds raised for $346 billion this year, which is of course a double last year. And the credit market is straining to absorb it. Spreads are widening, and the cost to insure this debt is climbing, of course, because we've seen, you know, the bond market inflation rates, etc. And so, essentially, there was another report which came out that said, "Hey, um a lot of this financing and a lot of this debt is starting to really get out of control, and as these rates continue higher, it's going to become more and more expensive. This may be problematic. This is starting to get real bubbly. We need to be a bit careful right now. This could be, you know, something that is a problem in the future, okay?" Well, that was just a report. This report had actually came out already. However, a little bit afterwards, I think this was either the day before yesterday or yesterday, Chamath posted a chart of CoreWeave's bond yield hitting 15% and called it a private credit bubble in AI, referencing back to that initial report, which, of course, started this whole thing. And then Elon responded to that with one word, just saying, "Yikes." So, the whole internet started paying attention to the AI's debt, and then this report started really gain some more attention, and then it was just this whole thing where everybody's basically saying like, "Oh my god, AI's in a bubble. It's in a debt bubble. Everything's going to burst. Everything's going to collapse." Now, don't get me wrong. I mean, it definitely is problematic, but this is not an unknown. And and I think that's kind of the thing about this that surprised me was that the whole market kind of freaked out about this whenever the everyone was like, "Oh my god, look at all this debt." But it's like we all know that. I mean, even look at the hyperscalers. Like, forget everything else. Just look at what's happening with the hyperscalers specifically. Just isolate on them. We know what's happening with their free cash flow right now in order to finance all of these data centers they're building out. That they're building out. We know that these neo clouds, they don't make enough money to cover what they're doing. They're doing this off of financing from the beginning. Like, that's their whole game. That's what they've been doing from the beginning. So, this isn't anything new, per se. I just believe that when you start to already have these doubts and these lingering worries and thoughts, and you get a new report that Chamath responds to, and Elon responds to, naturally, you end up in a position in which it kind of just adds a little bit more fuel to the fire rather than starting a fire that wasn't there already. You get what I mean? This has already kind of been a problem. Now, to add more to that, going into the third reason, reports started coming out over the last few days, which are unconfirmed, by the way, and I want to make that very clear, but that doesn't matter. The market responds to how it feels about things, not if those things are actually even true, okay? But there were reports that came out that surfaced that Nvidia may be weighing a $250 billion financing guarantee for an OpenAI data center on top of backing billions of its own chip sales. Now, again, this is unconfirmed, and Nvidia and OpenAI declined to comment, so this is not locked in, but in a time where everyone's worried about interest rates, everyone's worried about debt, it becoming more expensive, Neo clouds blowing up, when you have Nvidia potentially coming out and doing this like kind of circular financing sort of thing, you know, they'll say it's not circular financing, and kind of it is, right? It just adds more fuel to the fire, and it makes everyone concerned because they didn't say anything. They didn't say yes, they didn't say no. And the fear is that this demand could depend on Nvidia's own money flowing back, not real independent demand, which makes the debt situation looks much more scary, right? Makes it look much more scary, especially considering the fact that Nvidia does have financial backing for some of those Neo clouds. So it's like all these little pieces start to come together. Moving on, reason number four. Earlier this week, we talked about this, but earlier this week, we saw the news that CXMT, which is China's DRAM maker, um is potentially creating some sort of memory chips that have a much much bigger capacity than some of the ones that are on the market right now, um in terms of price per capacity, okay? So as we can see here, earlier this week, China's CXMT announced a breakthrough in a denser next gen DRAM design, plus a new server memory chip by year end. And naturally, of course, that spooked the whole memory group. Micron, SK Hynix, Samsung, SanDisk, Western Digital, they all fell for multiple days on fears that essentially, if China would successfully accomplish this by year's end, they would flood the market with supply, cheaper supply, which creates the commoditization cycle. These um frontier uh memory companies like Micron, SK Hynix, etc. Can't charge the premiums that they've been charging, and that will naturally drive down prices, and then it creates again that commoditization cycle where everything and all hell breaks loose. Now, I understand why this is a fear, and we've seen this fear so many times, whether it was with Deep Seek or um what was the one that happened earlier this year? It has a funny name to it. I can't think to it. I can't think of it for some reason right now, but it's like this company and they have the funny little name, and they were going to be able to create chips. I can I'll I'll put it in the comments, I'm sure. But, we've seen this play out so many times, and even from this report that we got earlier this week, we've seen many analysts weigh in, and most are skeptical, right? We got Mizuho said that changes basically nothing in the short term even if it is true, and even and that's if it is true, which can be a long stretch because just because they have plans for production does not mean they can do it at a scale that can impact the global supply. You know what I mean? In addition to that, it is also standard DDR5. It's not the HBM that actually drives AI memory value, and CXMT still faces US equipment restrictions. So, like the real risk here is maybe longer-term oversupply if this even comes to fruition, and that's a big ask. That is not a right now problem whatsoever. And so, many analysts are kind of writing this off, especially now that the initial shock of it has gone away, right? That's reason number four. Reason number five is the most recent one, of course, and that is the inflation data that came in recently, and it definitely makes the whole debt thing much more problematic because as I'm sure many of you saw, CPI and PPI inflation came in much worse than expected. CPI was just slightly worse than expected. PPI was way worse than expected. PPI was supposed to come in at 5.3 to 5.5% according to Wall Street. It came in at 6%, which is of course the hottest PPI reading in over six uh four years. Sorry, four years. And naturally, that can be problematic. Think about the chain of events. Higher inflation, higher interest rates, higher interest rates equals usually higher um you know, more costly loans. More costly loans on all this debt it problematic because all the debt that's in the world of AI becomes more expensive, which makes the bubble more likely to burst in the eyes of people who believe it's a bubble. So, when you combine all of these dang old things together, the neo clouds, the debt, the circular financing, the kind of circular financing, maybe not, China and their memory situation, and hot inflation, guess what? You end up in a situation just like this where it's just a rough week for AI. It's just a rough week for AI, and it makes a lot of sense as to why we're seeing a rough week like this. You know, people I see it all the time, people will always cope. They say things like the the AI market's being targeted by the elites and the lizard people because they don't want to see it succeed. I'm like, or it's because there's a bunch of issues going around with the debt and the financing right now where in we're in an we're in an environment right now which interest rates could go higher, which is going to make the debt that we currently have more costly, and people are scared about that. That might be the reason. I think And am I like am I saying that there isn't any targeting, there isn't any manipulation? Of course there's manipulation. Any market is manipulated, period. But I think that this is a reasonable pullback that we're seeing right now, and I think it's justifiable. However, I do believe that it's a little bit drawn I think it's a little bit drawn out. I think it's a little bit over extreme and maybe a little bit dramatic because at the end of the day, something that you need to understand is that almost none of this says that the technology, actual AI as a whole isn't working anymore, and that the money that all these companies are spending is going to go to nothing. Demand is still exploding. Look at what Micron just said in their last earnings report about the um the the demand for the chips that they're producing. I mean, we're talking years and years and years in advance. Look at some of these independent companies. Look at Software. Look at what they're what they're targeting right now. I mean, it's nuts, you know what I mean? Coreweave, which is one that everyone's talking poorly about right now, its revenue's up 112% year over year, okay? So, it's not a story about whether or not AI is going to just stop working. It's more of a story of whether or not AI is too over leveraged as it's heading into a higher interest rate environment, which could cause um more risk with the debt that is backing the world of AI right now. And I think that makes a lot of sense. However, I do think that this is a little bit like we're getting a little bit emotional. I think we're getting a little bit emotional when it comes to the way in which the market is outperforming as a response to all of these things, okay? And so with that in mind, it's just one of those situations where when I see the market really pulling back and crashing as a result of things like this, I go, "Okay, do I think that this is going to change the general trajectory of AI? Do I think it's going to stop AI? Do I think it's going to end the wave?" Not really, no. And so because I believe that all of these things together are maybe reasons to be a bit more cautious, but definitely not reasons that AI isn't going to work and that it's not going to continue to, you know, explode like it has been, I just see this as an opportunity. Realistically, when I see AI stocks pulling back like this as a result of these pieces of type, you know, types of pieces of news and I go look at something like Micron and from this high down to this low, I mean, it fell 20% over the span of a couple days. I actually do look at it and think, "Yeah, this looks like a pretty decent opportunity, you know, for going against the grain." And so for some of these stocks, I would actually say they look like decent buying opportunities. You know, like Micron, for example. Micron's price rolled all the way over. It came down into this Fibonacci golden zone between $866 and $805, which is a massive level of support. And on the live stream earlier today, I told you guys, I think that this is a decent time to be doing a little bit of purchasing for Micron. I wouldn't be I wouldn't be surprised to see Micron try to bounce out of this zone and try to recoup some of those losses. And you can already see it happening. If I go to the 4-hour chart, check this out. It's already happening. We're already seeing Micron having buyers stepping in trying to support the price back up towards the top side. Same thing goes for AMD. AMD is another great example. AMD's price is coming all the way back down into its own Fibonacci golden zone between $547 and $518. And look what's happening. The buyers are stepping in right now and they're trying to use that support to try to support the price and maybe even potentially reverse this price somewhere in here. Nvidia is doing something similar. Um Nvidia is a bit of a different story and the reason why I say that is because Nvidia is um it's not really performing super well right now. Like it had this golden zone. It tried to break through it, but it kept failing to do so, and even when it successfully did it here, it ultimately failed, and now it's back below the golden zone and approaching this ascending level support. Usually, when this happens, you'll see stocks, you know, stocks can really start to pull back when they approach these ascending levels of support. So, Nvidia is a little bit more sketchy to me right now, honestly, but some of your other ones, I mean, yeah, like your AMDs, your Microns, they look pretty decent. Even your Neo clouds, guys, like even, you know, something like a Nebius. Look, Nebius is doing really well. There's a world in which if Nebius is capable of holding the support and maintaining some balance here around 167 to 188 in this golden zone, there's a world in which Nebius goes for another run back up towards 200. I can see that happening. Now, if Nebius falls below this golden zone, that's obviously a bit more problematic, and then that's when you're looking at 146, 122, then 97, you know, like things can get much uglier from there. But, realistically right now, I mean, the buyers are stepping in in decent fashion. Look at Corweave. Corweave came down to this previous low that it put in back here in July, and as it's hitting that low, the buyers are stepping in and trying to hold it. Doesn't mean that it's going to successfully hold, and if it doesn't successfully hold, Corweave's probably coming back to 50 to 40 bucks, but you get my point. The buyers are stepping in here, and you are already starting to see some signs and signals of these pullbacks slowing down. And so, I do generally think that this could be a decent buying opportunity for some of these different AI companies and semiconductors that are performing really poorly over the last week as a result of these five different pieces of news, okay? So, personally speaking, I am going to potentially use this as an opportunity to look for some entries. the one that I'm the most excited about is Micron. Right now, now that it is bouncing back to around 910, 911 bucks, I'm a little bit less interested. But, like I said on the live stream, you know, if I can get Micron anywhere in that 870 to 812 dollars zone, I'm probably going to open up a pretty decent size long trade on it. You guys know Micron is one of the ones that you'll see me long trade pretty frequently here on the channel. We do a pretty good job on it, you know, 9%, 16%, 15% gains. We We've gotten some pretty decent gains on Micron before. So, I'll probably go in and look for some swing trade opportunities on Micron if I do get that reversal back to the golden zone. If not, you know, if it just kind of bounces back up, totally fine by me. All good, no worries. I'll just look for the next opportunity. I think Micron's the clearest opportunity for a pretty solid, you know, pretty solid you know, dollar cost average or long trade pretty soon here. You guys know I do a lot of that over on Liquid by the way. This is the platform that I do all of my trading on whenever it comes to actually like getting in, getting out, getting in, getting out. If any of you are interested in doing any sort of trading, long trading, short trading, buying, selling with leverage, whatever it may be. Don't forget, I have a link down below to Liquid. This is the platform I do all of my stock market trading on exclusively. And if you use my link, they're going to give you a $20 bonus when you deposit 100 bucks and 10% off your fees moving forward, which can save you a lot a lot of money over time, okay? So, if you've ever considered doing any sort of trading like that like I do, make sure to check out the link down below to Liquid. It's one of the best platforms, if not the best platform for stock trading out there, okay? Make sure to go check that out. So, I'll keep you guys updated there. Um whenever it comes to the trades, not really making too too many moves on my hyperscalers Google Amazon Microsoft. Like we talked about on today's live stream, not many great opportunities for our purchases for them right now. So, just going to kind of ride it out and yeah, just kind of go from there, okay? So, I'll keep you updated on it as it all does play out, but I really just wanted to let you know like listen, this is why we're seeing the AI sector being targeted right now, why it's pulling back right now. It is reasonable, however, I do think it's getting a little bit overextended and that could present some great opportunities for some dollar cost averages. So, I'll keep you updated on it as it plays out. If I missed anything, any pieces of news, please do let me know. Uh you know, I'm a one-man show over here when it comes to the research and stuff, so sometimes I do miss it. So, feel free to let us know in the comments. I'll give it a good old pin and I can't wait to see you all in the next one. Peace out, everybody.